Australia has increased tax concessions to encourage oil exploration in the far reaches of the Great Barrier Reef, angering environmentalists who warn an oil spill could destroy the world's largest living reef system.

The Australian government says the new concessions are needed to encourage oil companies to explore remote sections of the reef if Australia is to secure future energy supplies.

"If there was a bad accident or a spill we'd have a massive oil spill washing up on the outer barrier reef within no time at all," Don Henry, executive director of the Australian Conservation Foundation, said on Wednesday.

"In our point of view, that's just totally unacceptable and the government should not be encouraging exploration."

The world-heritage listed Great Barrier Reef stretches 2,000 km (1,300 miles) north to south along Australia's northeast coast and attracts nearly two million tourists a year.

Environmental groups warn an oil spill on the reef, unlike the Exxon Valdez leak in Alaska in 1989, could not be cleaned up or washed away because the oil would permeate the living coral.

"It's not like rocks. You can't walk around on it and sponge it up and soak it up. Once it's into that porous structure, that reef will be contaminated for decades." said James McLellan, coordinator for the Northern Queensland Conservation Council.

Prime Minister John Howard last week released a major energy policy, "Securing Australia's Energy Future", which identified four oil basins on the outer edge of the reef for exploration.

"Encouraging further exploration in these areas is in Australia's interest and is a high priority for government," the report said.

The change hikes the tax concessions to 150 percent from 100 percent.

"Let me make it quite clear to exploration companies and the Australian community that the government will not allow any field development that would impact on the reef systems off the Queensland coast," said Peter Lindsay, a minister for parliament whose electorate borders the reef.

Australia's current offshore oil production is centred off its southern and northwest coasts, but the Great Barrier Reef has long been identified as potentially holding vast reserves of oil.

Previous administrations have discouraged oil exploration near the reef for fear of an ecological disaster. Oil companies, for their part, have been reluctant to explore because of the technical challenges of drilling in the region's deep water.

In 2001, Norwegian company TGS Nopek abandoned plans to drill on the Townsville trough amidst protests from environmental groups and smaller political parties.